[ARFC] Reserve Factor Updates - Polygon Aave v2


title: [ARFC] Reserve Factor Updates - Polygon Aave v2
author: @TokenLogic
created: 2023-07-08


Summary

This publication will update Reserve Factors (RF) on Polygon v2 to encourage users to migrate funds to v3.

Motivation

With the goal of transitioning users from Polygon v2 to v3, this publication, if implemented, will increase the RF of asset on the v2 deployment.

Increasing the RF routes a larger portion of the interest paid by users to Aave DAO’s Treasury. User’s funds are not at risk of liquidation and the borrowing rate remains unchanged.

By progressively increasing the reserve factors, the interest rate for supplying these assets on v2 will be increasingly less attractive, thus encouraging suppliers to transition positions to v3.

Of the assets that are currently frozen, with the exception of BAL, the RF is to be increaed to 99.99%. Around $680k of users positions, CRV, DPI, GHST and LINK will receive near zero deposit yield. This represents less than 0.5% of Aave v2’s TVL. The highest deposit yield of these assets at the time of writing is 0.21%. This change will have minimal affect.

The remaining assets are to receive an incremental 5% increase in the RF. After implementing this publication, user elasticity shall be assessed and the impact of the updates before moving forward with additional increases.

There shall be a minimum gap of 2 weeks between each subsequent update. Target AIP submission date is week commencing 31st July, ain 3 weeks time.

Specification

The following parameters are to be updated:

Asset Current RF Proposed RF
DAI 21.00% 26.00%
USDC 23.00% 28.00%
USDT 22.00% 27.00%
wBTC 55.00% 60.00%
wETH 45.00% 50.00%
MATIC 41.00% 46.00%
BAL 32.00% 37.00%
CRV 38.00% 99.99%
GHST 60.00% 99.99%
LINK 50.00% 99.99%

Next Steps

  1. Following community feedback, submit the ARFC for a snapshot vote for final approval.
  2. If consensus is reached, submit the first Aave Improvement Proposal (AIP) to implement the proposed updates.
  3. Subsequent increments will be done directly through an AIP to reduce the governance overhead.

Disclaimer

The author, TokenLogic, receives payment indirectly from Aave Grant DAO via Butter as part of the Incentivised Delegate Campaign. TokenLogic is a delegate within Aave community.

Delegate: 0x2cc1ADE245020FC5AAE66Ad443e1F66e01c54Df1

Copyright

Copyright and related rights waived via CC0.

3 Likes

Strongly in favor of using RF to push users to V3 deployments. If successful on Polygon V2, would love to see this replicated on Avax V2 and Mainnet.

1 Like

We support the outlined updates.

Hi Everyone,

With ETHcc coming to an end, we will create a Snapshot starting Monday 24th July to progress this proposal through governance.

The payload for this proposal is already prepared and can be found here.

1 Like

Hi Everyone :wave:

After a successful Snapshot vote, we have now published the corresponding AIP.

In line with the original proposal, we will assess the affect of the current AIP and then follow up here with a comment detailing the next increase to the Reserve Factor (RF) before proceeding to AIP (ref. Step 3, Sect. Next Steps). At this point in time, we are planning on submit a 5% RF increase at the start of September.

Hi Everyone,

Following on from the previous proposal, the next AIP is being prepared with the following parameter changes.

Asset Reserve Factor
DAI 31.00%
USDC 33.00%
USDT 32.00%
wBTC 65.00%
wETH 55.00%
MATIC 51.00%
BAL 42.00%

We intend to publish the AIP the first week of September. This is 1 month after the previous update and we may soon proceed to fortnightly updates.

1 Like

Hi Everyone,

Following on from the previous proposal, the next AIP is being prepared with the following parameter changes.

Asset Reserve Factor
DAI 36.00%
USDC 38.00%
USDT 37.00%
wBTC 70.00%
wETH 60.00%
MATIC 56.00%
BAL 47.00%

We intend to publish the AIP the first week of October. This is 1 month after the previous update and we will be moving to submitting AIPs every second week going forward.

Hi Everyone,

Following on from the previous proposal, the next AIP is being prepared with the following parameter changes.

Asset Reserve Factor
DAI 41.00%
USDC 43.00%
USDT 42.00%
wBTC 75.00%
wETH 65.00%
MATIC 61.00%
BAL 52.00%

We intend to publish the AIP after the Governance v3 Activation proposal has been implemented.

Hi All,

This proposal has been progressed to AIP.

Voting Starts: 24 Oct 2023, 16:43 UTC +01:00
Voting Ends: 27 Oct 2023, 08:43 UTC +01:00

Thank you for all the support and participating in the vote.

The next proposal is tentatively scheduled for when the voting embargo is lifted in a couple weeks time.

This topic was automatically closed 30 days after the last reply. New replies are no longer allowed.

Hi everyone,

With AIP367 passing, we are soon to submit the next proposal as we increase our cadence to every second week.

In the next proposal, all non 99.99% RF values are to be increased by 5.00% with exception of BAL which is being amended to 99.99% in line with all other frozen assets.

The following parameters are to be updated as follows:

Asset Reserve Factor
DAI 51.00%
USDC 53.00%
USDT 52.00%
wBTC 85.00%
wETH 75.00%
MATIC 71.00%
BAL 99.00%
1 Like

Hi everyone,

A quick update on reserve factor values being updated. In the next proposal coming this week, the values are to be increased by 5.00% again and will now be as follows:

Asset Reserve Factor
DAI 56.00%
USDC 58.00%
USDT 57.00%
wBTC 90.00%
wETH 80.00%
MATIC 76.00%

Hi everyone,

A quick update on reserve factor values being updated. In the next proposal coming this week, the values are to be increased by 5.00% again and will now be as follows:

Asset Reserve Factor
DAI 61.00%
USDC 63.00%
USDT 62.00%
wBTC 95.00%
wETH 85.00%
MATIC 81.00%
3 Likes

Hi Everyone,

When this AIP passes, the next AIP submitted will contain the following RF adjustments:

Asset Reserve Factor
DAI 66.00%
USDC 68.00%
USDT 67.00%
wBTC 99.99%
wETH 90.00%
MATIC 86.00%
BAL 99.99%

Thank you to everyone that participates in the vote.

2 Likes

Hello,

The next update will bring the reserve factors to:

Asset Reserve Factor
DAI 71.00%
USDC 73.00%
USDT 72.00%
wETH 95.00%
MATIC 91.00%

Should execute this week, after that we will be increasing another 5%.

2 Likes

Hello,

The next update will bring the reserve factors to:

Asset Reserve Factor
DAI 76.00%
USDC 78.00%
USDT 77.00%
wETH 99.99%
MATIC 96.00%

Should execute this week, after that we will be increasing another 5%. All the way up to 99.99%

2 Likes

Hello,

The next update will bring the reserve factors to:

Asset Reserve Factor
DAI 81.00%
USDC 83.00%
USDT 82.00%
MATIC 99.99%

Should execute next week, after that we will be increasing another 5%. All the way up to 99.99%

What has been the impact of these reserve factor updates? Can we see data on how these reserve factors has affected user position changes? It is important for Aave to take proactive action in this way. It is also important to be sure that the things we do are actually having the impact we expected. thank you.